Will Novartis follow through with Gen-Probe bid?

Novartis CEO Joe Jimenez (photo) said last week that one prime dealmaking area for his company might be diagnostics. Along with potential buys in animal health, generics, biotech and consumer health, the right diagnostics deal could induce Novartis to pay as much as $3 billion, he said.

Now the Wall Street Journal reports that Novartis is the last bidder standing in an auction for Gen-Probe, which makes tests for HIV and other sexually transmitted diseases. Indeed, bids for Gen-Probe were due in the middle of last week, just after Jimenez made his diagnostics-friendly remarks, and because Novartis has a partnership with the company, deal-watchers certainly expected it to bid.

But now that competing bidders, including Life Technologies and Thermo Fisher Scientific, have dropped out, Novartis may decide not to make a deal after all, sources tell the WSJ. That news sent Gen-Probe stock tumbling by more than $10, to around $71 per share. Friday, the stock closed over $81, giving it a market value of $3.9 billion, the WSJ notes.

Price might be an issue; folks were expecting a winning bid to come in over $80 per share, but potential buyers apparently didn't like that idea. And now that rivals have dropped out of the auction, it's not so urgent for Novartis to swoop in with an offer to protect its partnership with Gen-Probe. But like several of its Big Pharma fellows, Novartis has been keen on diversifying for some time as a way to take the edge off impending generic competition for some of its big products.